Verv aims to encourage the use of renewable energy, and its production by prosumers, by enabling peer to peer energy trading. VLUX tokens are used on Verv’s end to end renewable energy trading solution which combines deep learning AI with blockchain. Furthermore, hardware devices placed in peoples’ homes, collect data and use AI to lower energy bills. Through an app, Verv provides services, such as appliance homecare services, insurance reductions, and product recommendations.

To find out more about Verv and VLUX we had a dynamic conversation with Peter Davies, CEO and founder of Verv in an exclusive Q&A.

Can you tell us a bit about yourself, your background and what you were doing before Verv? What was the inspiration which led you to launch Verv?

I studied electronics engineering at university and started off providing consultancy in energy use services in the hospitality industry, specializing in the electricity use in hotels. Thus, we noticed that with high-frequency data collection, we could see when individual appliances were switching on an off. That’s when the penny dropped and we realized we could do the same thing in homes.

What drives you to travel again the arduous path of a startup?

What we’re building at VLUX is difficult, but it’s also very exciting. Our vision is to reduce the cost of electricity – particularly for those most disadvantaged in our communities – while also encouraging green, clean energy. We believe a peer-to-peer energy marketplace is the best way of achieving these goals. And although there’s widespread demand for what we’re doing, only a handful of companies are building that globally. However, there are many hurdles in place, but we’re all focused on building a future energy system that we think is incredibly valuable.

What caused the genesis of VLUX?

We had our energy monitoring device and all its appliance disaggregation capabilities, which was perfect for monitoring energy use consumption and energy generation from micro-renewables. So, it was a natural next step to combine those capabilities to optimize the use of energy infrastructure and the trading of energy between users.

What is the VLUX Platform all about?

The VLUX platform is fundamentally about empowering households and individuals, enabling them to buy, sell, and trade energy services just like a large company.

Households with solar panels on their roof (prosumers) currently have no options to sell their electricity except back to the grid – typically for 5p/kWh in the UK (export feed-in-tariff). At the same time, their neighbors may be purchasing electricity for ~15p/kWh. Therefore, we’re building a platform to enable households to share energy directly with one another, thus improving access to more affordable, green energy and incentivizing the uptake of renewables by increasing the ROI of installation.

What issue does the VLUX Platform solve?

At its core, we’re trying to provide the platform to facilitate a transition to a greener, more stable, flexible, more decentralized and distributed electricity grid. Part of that mission is to drive down the cost of electricity for consumers – in the UK there have been announcements after announcements of increasing energy prices, which is totally in contrast to the fact that the price of renewables has been falling and once installed has zero marginal cost. We also believe there’s significant potential in energy use data – particularly at an appliance level – that’s currently completely unactualized. Consumers should be able to monetize this data; effectively they could earn back money from their electricity use!

Will consumers benefit from monetization of data? What happens with GDPR?

We’ve designed our system to accommodate the changes in GDPR – the timing has been perfect in a way. Fundamentally, the consumer is at the very forefront of our platform and will be able to monetize their data in the form of money off of their energy bills (in VLUX tokens) thanks to our partnership with the data sharing ecosystem Ocean Protocol which provides a secure platform for data sharing.

Why does this need to be decentralized? What are the benefits in achieving this with decentralization compared to a centralized solution?

The benefits of decentralization will be most pronounced as the system scales and its capabilities develop. Distributed ledger technology means that we are able to reduce the cost of any individual ‘transaction’ – be that the purchase of 0.25kWh for pennies, or a reward payment for turning your fridge off for 30 minutes during a period of peak energy usage.

How many VERV units are sold to date?

We have several thousand (>10k) units already in pre-order, awaiting our manufacturing to ramp up.

What are the business model and monetization plan?

There are broadly speaking two options: first to sell the device itself for a profit margin, or to sell the device at cost and monetize through subscriptions to additional value-added services we can provide (for example safety alerts and predictive maintenance alerts).

How do the token economics work?

During the token sale event, up to 70% of the total supply of VLUX tokens will be distributed to the public, up to 10% will be reserved for distribution among the first 200,000 VHH units sold, and the remaining tokens will be kept by the company. Of the expected 20% of tokens kept by the company, 10% will be kept for the Verv float and original contributors, and 10% will be reserved for future growth.

The funds raised from the ITO will be used to accelerate development of the VTP. 47% will be reserved for engineering, software, research, and development, to continue building our blockchain trading technology and patent portfolio. 21% of the funds will be reserved for user acquisition, and building on our track record of delivering high impact, high-value partnerships. 10% will be used to subsidize the cost of the first 200,000 VHHs, accelerating adoption of the VTP. 9% of the funds will be allocated for ongoing operations/admin, with a further 8% used for legal costs. 5% will be reserved for contingency.

Tell me about platform fees; is the 1% based on total transaction volume? What volume is needed to achieve 1%?

Absolute numbers are difficult to provide because a lot of it will depend on exogenous factors (e.g. size of household, type of renewables generation, technology platform cost {e.g. cost of gas}, monetary value of data), but our initial modelling suggests that with 100,000 households a 1% fee would be sufficient to sustain the platform. This represents less than 0.3% of all UK households, and without taking into account international users.

How do you balance the diverging needs of the initial investors/funders of the network, versus the future users?

We have tried to be as strategic as possible, in part looking for investors within our potential future users of the platform, so hopefully, their needs should be aligned.

The number of VLUX tokens required for participation or use of the platform will vary according to the VLUX-fiat token price so that the fiat cost to the user will remain affordable.

This is a utility token, which the SEC is against. What are the risks here?

SEC is not against utility tokens but rather they don’t believe most ICOs are actually launching utility tokens. We’re creating a token that already has value and utility today, so we have taken legal advice on this and we have tried to minimize the amount of risk that we’re exposed to.

I noticed Ocean Protocol is a partner. What is the relationship there? Will you be contributing data?

We’re really excited about the partnership with Ocean Protocol, as we see huge potential and value in all the data that’s generated by the Verv device that’s currently completely unutilized. We believe that consumers should have full control over their data and be able to benefit financially from sharing it with third parties should they so wish. That’s why we’ll be offering consumers the opportunity to share their data with third parties in exchange for money off of their energy bills in the form of VLUX tokens. Ocean Protocol will be the data sharing platform that we use to do this. We’re in the process of revealing more details about the partnership so unfortunately, I can’t say too much about it here, but suffice to say that it’s a very natural partnership given our focus on unlocking the value of data. We believe there’s huge potential in the partnership.

Does Centrica as a seed investor have any exclusivity rights or favorable terms?

The social impact venture arm of Centrica, Ignite, were seed investors in the company and have been very supportive since their initial investment, providing advice and access to teams within Centrica and British Gas. They’ve continued to maintain the same share percentage in the company as we’ve grown, which is a great indicator that they like where we’re headed and want to stay part of the journey. We don’t have any exclusivity rights with them – we are funded from the Social Impact / Ventures side, so there are no restrictions on whom we can work with in the future.

How does the VERV protocol compare to PowerLedger?

There are some similarities, insofar as we’re both looking at the peer-to-peer trading of energy, but we believe our focus on data, appliance disaggregation, Artificial Intelligence and Machine learning, all facilitated by our advanced hardware device, really set us apart from PowerLedger or other similar energy trading blockchains.

What is the go-to-market strategy?

We’re in advanced discussions with a number of utility companies and energy generators, who are really keen to offer their customers a new product and value proposition. Initially, we’re looking to partner with established energy companies as it’s key to work within existing energy regulations and frameworks, but the vision in the future is to develop a more flexible platform that does not necessarily require the participation of energy companies. We believe adoption of our platform will also be accelerated by the success of our existing Verv device. We’re in late-stage trials with a number of major energy utility companies and insurance companies, who are looking to provide Verv units to their customers as a value-add proposition or to reduce their operating costs.

For example, insurance companies are excited about the ability of the disaggregation device to provide safety notifications if you’ve left your hair straighteners on, or condition monitoring alerts if the filter on your washing machine is getting blocked.

Utility companies are really interested in the appliance level data because it can provide detailed information to customers to encourage energy consumption at different times of day, reducing the strain on the electricity grid.

Once households have a Verv device in their homes, it will be a very straightforward opt-in or software update to enable them to join the trading platform.

How will you scale?

We have already put in place the manufacturing processes to produce the Verv hardware at scale and low cost. We’ve made many design changes to the hardware in recent months, which has really driven down the cost and improved the performance, of our hardware.

What are the unit economics for the prosumer? Will any exclusivity be imposed on them to use VLUX?

The economics will vary depending on the prosumer’s current electricity consumption but on average, we expect the payback period to be less than a year. This is due to the combined benefits of purchasing electricity from lower cost, green, local sources and our ability to provide energy efficiency recommendations to the user. There won’t be exclusivity imposed to use VLUX, but we’re planning to ensure that VLUX is the most natural, economical, and user-friendly choice – so they won’t have any need to go elsewhere!

What have been your proudest moments since you launched the Verv Project?

We’ve grown so quickly in the past year and we’re now a team of over 50, located in central London. It’s still an amazing feeling every time we’re mentioned in the news or on stage by people we don’t know! We recently executed the UK’s first P2P trade of energy on the blockchain at our energy trading community in Hackney and that was a huge milestone for the project that we’re really proud of.

What have been your biggest mistakes?

There have certainly been a lot of learnings; that’s how we like to think of past ‘mistakes’!

What keeps you up at night?

There’s a lot of uncertainty around government regulations within the crypto space, and that is always something that’s unnerving for businesses. However, we have run our token sale to the highest standard – ensuring that advice from lawyers and advisors has been fully incorporated – to the extent of fact-checking every single word of our whitepaper! Our lawyers have scrutinized the token sale in the way they would an IPO, which is the most relevant reference point that currently exists in UK regulations. This is critical for us because it gives the participants in our token sale the peace of mind and confidence that the project will not be thrown off-course by regulatory scrutiny.

Can you share your experiences about doing an ICO? Any lessons learned?

Get started early! The processes will always take longer and be more involved than you expect!

Where are you targeting geographically and seeing most traction from investors? What type of investors do you have?

We have a lot of interest from Europe because that’s where we’ve been focused on in recent years, but there has been a huge amount of interest growing in Asia. That’s in part because of the thriving crypto communities there, but also because many energy companies from Asia are looking at what we’re doing and seeing the potential. There’s a real mix of HNWIs and individuals who are excited about what we’re doing and our mission and want to support us.

It has been a bear market so far this year. What is your outlook for the rest of 2018? Is it going to be bullish or bearish and why?

I think we’re already starting to see the reduction of hype and wild, uninformed speculation but this is a good thing for the industry in the long-term as we look to make full-scale implementation of blockchain a reality. I think there will continue to be a lot of investment and money flowing into the blockchain space – just less speculation.

Ethereum has dominated the issuance market; why did you choose Ethereum?

It’s the most well-developed platform with the highest concentration of experienced blockchain developers, so it’s the most reliable choice at the moment. However, we realize the industry is changing extremely rapidly, new solutions and options are emerging almost every day, and we’re maintaining the flexibility to transfer to another platform should it be better suited to our purposes.

Are you worried about the scaling issue?

For the VLUX platform, we’re using local community chains so scaling should not be an issue for us. The local model we’re building is beneficial also because it encourages local trading of electricity – which is more efficient and beneficial for the grid infrastructure.

Do you think other Issuance platforms such as Waves, Stellar, Qtum, NEO or others can overtake Ethereum?

I think there will definitely be stronger competition within this space, and it won’t be so dominated by Ethereum in the future.

What are some of your favorite smaller companies/ICO Protocol projects?

Block.pass is interesting for us because they’re working on how we can prove the identity of devices – something that will be more critical as the IoT space grows and M2M communication becomes more commonplace. Of course, our partner Ocean Protocol! They’re doing really exciting work in building a data marketplace, and we think there’s huge potential for our partnership. We’re also an Energy Web Foundation affiliate, and we’re following the development of their Tobalaba blockchain closely.

What is your vision for Verv VLUX platform for 2023?

It will be an international platform that’s driving down energy costs for households, increasing the uptake of renewables, providing grid stability services to the distribution and transmission system operators, and providing a convenient data marketplace that enables consumers to sell their data to the likes of retail companies, electrical appliance manufacturers and utility companies in exchange for money off of their energy bills, should they choose to share it of course.

Where will the crypto-market be in the following years?

We’re in the space because we think it’ll be a rapidly growing space in the future – and we’re really looking forward to seeing how transformative it becomes.